UK donates $28 mn in emergency funds to Afghanistan amid fragile economy

The United Kingdom donated around USD 28 million in emergency funds ahead of winter in Afghanistan amid the country's fragile economy.

"The United Nations World Food Programme (WFP) welcomes a contribution of GBP25 million (approximately USD28.8 million) from the Government of the United Kingdom of Great Britain and Northern Ireland. The funds will go towards WFP's emergency operations for 15 million Afghan people facing food insecurity this winter," Tolo News reported citing World Food Programme's statement.

More than a year after foreign forces withdrew and the Taliban took power across the whole of Afghanistan, the country's economy has withered and development aid and assets are still largely frozen, leaving the country facing its most serious risk of famine in 20 years.

Meanwhile, economists believe that humanitarian aid is useful for the country's citizens in the short term, but it has not decreased poverty in the country, according to Tolo News.

"Humanitarian aid does not help anything because it is consumed, and it cannot prevent poverty in the country, "said Abdul Naseer, an economist.

"The aid that has been provided so far has been a victim of a lack of serious monitoring and control and has not been able to play a role in improving the country's situation, and we cannot expect it to prevent this crisis," said Shaker Yaqobi, an economist.

According to Tolo News, the Taliban's deputy economy minister welcomed this humanitarian aid and asked the international community to increase aid to Afghanistan.

"Humanitarian aid should change the direction of development and development aid so that serious steps can be taken in the field of job creation and the eradication of poverty," said Abdul Latif Nazari, Taliban's minister said.

Earlier, according to the World Bank's (WB) new Afghanistan Development Update, the country's economy contracted by about 20 per cent in 2021.

The World Bank report released, in October, points to a sharp decline in public spending, lower household incomes, and reduced consumption caused aggregate demand to fall. It also highlights disruptions in the payment system and supplies constraints further hampered private sector activities, initially forcing many businesses to close or scale down their operations.

"Preliminary statistics on the gross domestic product (GDP) show that the economy contracted by about 20 per cent in 2021. Over the past year, the resumption of off-budget international support for humanitarian needs and basic services helped mitigate some of the negative impacts," the World Bank report said.

The report concludes that Afghanistan is a much smaller economy now. "While there are signs of economic stabilization and resilience of Afghan businesses, the country continues to face enormous social and economic challenges that are impacting heavily on the welfare of the Afghan people, especially women, girls, and minorities," said Melinda Good, World Bank Country Director for Afghanistan.

"Living conditions showed slight improvements in the past few months, but deprivation remains very high across the country, and persistent inflation might further erode any welfare gains."

"The report projects that the real GDP in 2022 will contract further, with an accumulated contraction of close to 30-35 per cent between 2021 and 2022, before moving to a low-growth path (2.0 to 2.4 per cent) for the next two years, with no improvement in per-capita income," the World Bank said.

The report says that poverty is expected to remain widespread, with over two-thirds of households in the country struggling to cover basic expenses.